When Should You Buy Olin Corporation (NYSE:OLN)?

While Olin Corporation (NYSE:OLN) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$58.95 and falling to the lows of US$45.96. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Olin's current trading price of US$46.95 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Olin’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Olin

Is Olin Still Cheap?

Great news for investors – Olin is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Olin’s ratio of 7.25x is below its peer average of 15.61x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What’s more interesting is that, Olin’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Olin?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -4.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Olin. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although OLN is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to OLN, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on OLN for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Olin, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Olin you should know about.

If you are no longer interested in Olin, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.